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Court Will Decide a Land Bank Issue

An ongoing tax dispute between the Martha's Vineyard Land Bank
Commission and the West Tisbury board of assessors has now landed in
front of the Massachusetts Court of Appeals for a ruling that will set a
precedent for how the conservation agency conducts its land transactions
Islandwide.

At issue is whether the land bank's state-mandated tax
exemption becomes effective as soon as the agency buys property or at a
later date - specifically on the July 1 after the date of sale,
when tax bills go out for the new fiscal year.

The case centers on a land bank purchase from October of 2001, when
the agency bought 6.17 acres of open land on State Road known as the
South Indian Hill Woodlands.

The West Tisbury board of assessors subsequently rejected the land
bank's application for a tax abatement, and instead asked for
about $700 in property taxes to cover the eight months between the sale
and the start of the new fiscal year on July 1.

Though the amount in question is small, the case has far-reaching
implications. If the land bank is made responsible for the taxes, in the
future it could face hefty expenses depending on the size of the
property and the date of sale.

"The enabling act of the land bank says that the land bank and
all its real property shall be exempt from taxation. There is no
reference to any delay in the effective date of the exemption. It is
absolute and unqualified," stated an attorney for the land bank,
Adam Kahn of Foley Hoag LLP in Boston.

"The special act that governs the land bank is
open-ended," said Ellen Hutchinson of the Boston firm Kelley Law
Associates. Ms. Hutchinson is representing the West Tisbury board of
assessors.

"You cannot look at a statute in isolation; when you look at
this law in relation to all other taxation statutes, then the lank bank
clearly is not exempt from the moment it purchases the property. It only
becomes exempt when it is named owner the following Jan. 1," said
Ms. Hutchinson.

The first of the year is critical in this case because tax bills are
sent to the property owner of record as of Jan. 1. So, for example, a
tax bill for fiscal year 2005 - which began last Thursday -
will be sent to the owner of record as of Jan. 1, 2004.

Generally when a land transaction takes place in the middle of the
year, the buyer and seller enter into an agreement by which the new
owner will foot the tax bill from the date of sale forward.

Ms. Hutchinson also pointed out that similar enabling legislation
for the Nantucket land bank commission specifically mandates that the
real estate be exempt from taxation from the date of purchase.

"It does not say that in the Martha's Vineyard land bank
law, and our position is that you cannot read into the law a provision
that does not exist. If they intended the exemption to begin on the date
of purchase, they would have stated it specifically, as they did in the
Nantucket legislation," said Ms. Hutchinson.

The Martha's Vineyard Land Bank was created by an enabling act
of the state legislature in 1986. The agency includes the land bank
commission itself and advisory boards in each of the Island towns; each
advisory board is made up of town officials who must sign off on any
acquisition within that town.

"The idea of quarreling with the towns seemed unseemly, but
the principle is important. We decided to go forward with the West
Tisbury case to settle the matter once and for all, on the reasonable
assumption that what the court rules will apply to all these
towns," said land bank executive director James Lengyel.

"Part of the land bank's surprise over all this is they
are a part of town government. These decisions [to purchase property]
are made by town officials to achieve town goals. The properties are all
bought and managed for the public enjoyment, hiking, biking,
fishing," Mr. Lengyel said.

The land bank is funded by a two per cent fee that applies to most
Island real estate transactions.

"I think early on when the land bank was buying property some
of the towns or all of the towns abated taxes, but as time went on and
we all learned more about what we were doing, we realized there were
some instances when we shouldn't be. And this was such a
case," said Jo-Ann Resendes, principal assessor for West Tisbury.

The Oak Bluffs board of assessors in fact was the first Island town
to question the enabling legislation, in 2001. The purchase under
scrutiny was the Weahtaqua Springs Preserve - a property near the
blinker light - and the board ruled not to abate taxes for the
time between the sale and the next June 30.

Because of a technicality the land bank did not appeal the Oak
Bluffs decision (the town is now taking steps to foreclose on the
property). But they decided to press their case at the next opportunity,
said Mr. Lengyel. It turned out to be the West Tisbury property, for
which the assessors asked for $692.05.

In 2002 the land bank appealed the decision of the West Tisbury
board of assessors to the state appellate tax board.

That board ruled in favor of West Tisbury, which prompted the land
bank to take the case to the Massachusetts Court of Appeals in Boston.
Arguments were made in February; Mr. Kahn said he expects a decision
shortly.

In the time it has taken for the case to make its way through the
courts, every Island town except Aquinnah has decided to reject land
bank applications for abatements. But only Oak Bluffs and West Tisbury
have taken the additional step of putting properties into tax title
- the first stage of a lengthy process by which a town can seize
property.

About 10 land bank properties are currently in tax title, Mr.
Lengyel said.

Mr. Kahn concluded: "The enabling act also says that the
statute should be liberally constructed - that is, if there are
any doubts, decisions should be made to help out the land bank."

Ms. Hutchinson said, "I have to give credit to West Tisbury
and the town assessors. They saw something that in their opinion was
wrong - that the taxpayers weren't being adequately
protected by the law - and they took a courageous step to
challenge that."